Special agents, as the detectives are called by their employers, do not bully defaulters as recovery agents do, but use sleuthing skills to shadow subjects and help lenders nab them.
Many big defaulters have been traced till now and lakhs of rupees recovered using services of detectives, says a bank official.
"We have been doing it for more than a year. Many private and nationalised banks have approached us and sought our services," said Sanjay Singh, CEO, Indian Detective Agency.
Central and state financial corporations suffer considerable monetary loss owing to defaulters, who usually go without a trace after borrowing huge sums, or simply refuse to repay.
"We have helped them (financial institutions) recover huge sums of money," said Singh.
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Banks and others lend crores of rupee every year to individuals and firms, and lose nearly 40 per cent of the money, say bank officials.
Although recovery agencies managed some success in extracting dues, banks have nearly shunned their services after courts and the Reserve Bank of India took a stern view of the methods employed by them to recover money that is said to have driven many borrowers and their families to commit suicide.
In fact, actions by recovery agents more often than not ended up with the police or in courts, further delaying the recovery process.
"We have to get back money from the borrowers as mutually agreed in lending-borrowing agreement. Delay (in repayment) causes problem in our functioning and disturb earnings. To ensure speedy payments, banks had been engaging recovery agents... (whose high-handedness) received severe criticism... "Hence, we decided to take services of detectives, who help us in getting our money by remaining in the ambit of law," a senior official from the country's largest lender State Bank of India said, speaking on condition of anonymity.
Detectives conduct themselves in a professional way and are not the cause of any confrontation between banks and law, he said.
Hiring detectives is common practice in developed countries, but the trend is catching up in India too.
"Detective agencies can help in various ways to solve many criminal and financial bungling cases. Our agencies have been extending services to... Solving serious cases," said Kunwar Vikram Singh, Chairman of Association of Private Detective Body of India.